When a customer wishes to buy an item from a supplier that requires financing, the customer often requests terms of repayment from the supplier. The supplier may decline to provide the customer a line of credit because either the customer is unknown to the supplier or the risk failure to repay the supplier is perceived as too great. In such a case, the customer will then usually contact his or her lending institution to apply for a monetary loan. After checking the customer's business information and business credit standing as well as the customer's personal information and credit history, a representative of the lending institution informs the customer of the loan amount, period, and interest rate for which he or she is eligible. If the customer agrees to the terms of the loan, the lending institution's representative delivers documentation to the customer that, when executed, grants a security interest in the purchased product to the lending institution in exchange for the monetary loan.
The ways in people purchase goods have significantly progressed since the development of the worldwide web (WWW). Via electronic commerce (e-commerce), customers can now shop online from the convenience of their home, office, or while on the road using portable devices. However, while these and other online purchasing options are often significantly more convenient than their manual counterparts, financing such purchases still requires time and effort from the customer in addition to providing efficient securities to the lending institute. Thus, the financing process as described above is currently not useful for e-commerce transactions as it requires initiating an interaction and negotiation process with the loan officer of the financial institute.
Furthermore, the described typical lending procedure does not include a structured tool for the lender to track the lent money after monetary payment to the customer, and therefore the lender cannot monitor that the lent money was actually paid by the customer to the supplier according to the terms and conditions of the loan. For example, the customer may be a bakery requesting a loan for a new oven. However, the provided loan may be used for payments of debts of the bakery business. The lender in most cases has no knowledge of how the lent money is being spent.
The common practice of financial institutes or creditors is to determine a loan term primarily based on a credit score of the customer. However, credit scores do not always reflect the current economic strength of a customer which may be a person or business. As an example, a credit score of a small business may be low even when that business is profitable. As a counter example, a well-established business with a high credit score may suffer from temporary financial difficulties. The business's current financial standing may not be appropriately reflected in the credit score. Investigating the financial standing of the customer can be performed by a loan officer after reviewing numerous identifiers provided by the customer. As such, this practice cannot currently be utilized for e-commerce transactions.
Moreover, existing solutions do not allow a financial institute or other creditor to automatically and electronically establish a line of credit once the purchaser is deemed able to repay the loan. Thus, a customer who would likely be deemed worthy of receiving the line of credit may not be able to obtain such financing until he or she physically interacts with an agent of a financial institution.
Thus, the current solutions do not allow customers to conveniently shop and, upon deciding upon a purchase, obtaining financing via an established line of credit without needing to be personally present at a financial institution or at a business. That is, there is no current solution to approve/disapprove financing of an e-commerce transaction in real-time based on the current financial standing of the customer.
It would be advantageous to provide a solution that overcomes the deficiencies of conventional financing solutions.